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To promote stable, constructive labor-management relations through the resolution and prevention of labor disputes in a manner that gives full effect to the collective-bargaining rights of employees, unions, and agencies.

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DEPARTMENT OF COMMERCE NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION OFFICE OF OCEANIC AND ATMOSPHERIC RESEARCH ATLANTIC OCEANOGRAPHIC AND METEOROLOGICAL LABORATORY MIAMI, FLORIDA and NATIONAL WEATHER SERVICE EMPLOYEES ORGANIZATION, AFL-CIO Case No. 02

DEPARTMENT OF COMMERCE NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION OFFICE OF OCEANIC AND ATMOSPHERIC RESEARCH ATLANTIC OCEANOGRAPHIC AND METEOROLOGICAL LABORATORY MIAMI, FLORIDA and NATIONAL WEATHER SERVICE EMPLOYEES ORGANIZATION, AFL-CIO

The National
Weather Service Employees Organization, AFL-CIO (Union) filed a request for
assistance with the Federal Service Impasses Panel (Panel) to consider a
negotiation impasse under the Federal Service Labor-Management Relations Statute
(Statute), 5 U.S.C. § 7119, between it and the Department of Commerce (DOC),
National Oceanic and Atmospheric Administration (NOAA), Office of Oceanic and
Atmospheric Research, Atlantic Oceanographic and Meteorological Laboratory (AOML),
Miami, Florida (Employer).

After
investigating the request for assistance, which arose during negotiations over
the parties’ initial collective-bargaining agreement (CBA), the Panel
determined that the issue concerning the continued participation of
bargaining-unit employees in an "Alternative Personnel Management
System," also known as a personnel demonstration project, should be
resolved through an informal conference between a Panel representative and the
parties. If no settlement was reached, the representative would notify the Panel
of the status of the dispute, including the parties’ final offers and her
recommendations for resolving the matter. After considering this information,
the Panel would take whatever action it deemed appropriate to resolve in
impasse, including the issuance of a binding decision.

Accordingly,
Panel Member Andrea Fischer Newman conducted an informal conference with the
parties on October 29, 2002, at the Panel’s office in Washington, D.C. During
that meeting, the parties’ chief negotiators agreed to resume their
deliberations over a 6-week period at the local level in Miami, Florida, and
exchange information, in an effort to achieve a voluntary agreement on the
pending issues. Subsequently, the parties reported that while they had made some
progress in terms of improving their relationship, the issues remained
unresolved. On December 16, 2002, Member Fischer Newman convened a
teleconference with the parties to further mediate the dispute; however, the
parties failed to resolve the issues. The parties have submitted their final
offers to the Panel along with summary statements of position. The Panel now has
considered the entire record, including the parties’ arguments and supporting
evidence.

BACKGROUND

The Employer’s
mission is to conduct basic and applied research in oceanography, tropical
meteorology, atmospheric and oceanic chemistry, and acoustics. The bargaining
unit consists of approximately 70 professional and non-professional employees
who hold positions such as meteorologist, physical scientist, and electronics
technician. The Union was certified as the exclusive bargaining representative
of the unit in July 2000.

On December 24,
1997, DOC received final approval from the Office of Personnel Management (OPM)
to implement a personnel demonstration project for several of its organizations,
including the Employer’s laboratory in Miami, Florida. The demonstration
project was implemented in March 1998, for a 5-year duration; by letter dated
February 14, 2003, from Kay Coles James, Director OPM, DOC was granted
permission to extend the demonstration project for another 5 years; the letter
stated, specifically, that the extension is authorized "to the extent
necessary to validate the results of the project."

The
demonstration project provides alternatives to the Federal Government’s
customary procedures involving pay administration, position classification,
staffing, reductions in force, performance evaluation and rewards. Instead of
being paid under the General Schedule (GS) system of grades and steps, employees
are assigned to one of four pay bands; management has been given the authority
to align pay with performance, and exercise greater flexibility in hiring and
retaining scientists and other personnel.

ISSUE

Essentially,
the parties disagree over whether bargaining-unit employees should continue to
participate in the personnel demonstration project.

POSITIONS OF THE PARTIES

1. The Union’s Position

The Union proposes alternative solutions to
resolve the dispute. Its preferred outcome is that employees cease participation
in the demonstration project at the end of the initial 5-year term (i.e., March
28, 2003); however, if the Panel determines that employees should remain under
the demonstration project, the Union proposes that the Employer "maintain
compensation during the project at the level it would have under the General
Schedule pay system. Consequently, there shall be no reduction in the amount of
the pay pool during the term of this agreement."

Preliminarily, the Union argues that the Panel
has no choice but to end bargaining-unit employee participation in the
demonstration project, if the Union so requests. This position is based on
informal advice received from OPM that, in the absence of a voluntary resolution
between the parties, employees should be released from the demonstration
project.(1) Furthermore, the Panel should reach the same outcome as it did in a
previous case where it ordered the adoption of a union proposal to immediately
terminate bargaining-unit participation in a demonstration project.(2) In reaching
its conclusion in Fort Detrick, the Panel relied on a survey taken 1 year
after the project was implemented which revealed general employee
dissatisfaction. Similarly, a survey of AOML bargaining-unit employees taken 18
months after implementation of the demonstration project shows that 56 percent
were dissatisfied with it; another 62 percent expressed a desire to revert to
the GS pay system.

Although OPM has agreed to allow DOC to extend
the demonstration project for another 5 years, the Union alleges that the
Employer may have failed to provide OPM with evidence that an extension of the
demonstration project was necessary "to validate the results of the
project," as required by 5 U.S.C. § 4703(d)(1)(B). Furthermore, the Union
contends that a contractor’s report, commissioned by the Employer, based on
data gathered during the 3rd year of the project, shows only a
minimal relationship between performance and pay raises in the demonstration
project. The report concludes that measuring the linkage between the two is
"limited by attributes inherent in the pay for performance system,"
which demonstrates that the project is structurally flawed, making it impossible
to reward superior performance with higher pay over the long term; this
paradoxical outcome could undermine the motivation of superior employees to
continue to perform outstanding work. The Employer has failed to include
career-ladder promotions in its assumptions about what employees’ salaries
would have been had they remained under the GS system, which undercuts the
Employer’s claim that average salaries have increased more under the
demonstration project than they otherwise would have. Moreover, salary increases
under the demonstration project have been unjustifiedly discriminatory, e.g.,
employees within the Office of the Director have received substantially higher
percentages of salary and total dollar amount payout than those who work in the
Employer’s scientific divisions, fueling employee resentment. The pay system
under the demonstration project forces employees to compete against one another
for an annual pay raise, thereby undermining the collaborative scientific work
which employees perform at the Employer’s laboratory facility. Employee
surveys indicate that teamwork among employees has declined since the inception
of the demonstration project.

In the
alternative, if the Panel determines to require employees to continue their
participation in the demonstration project, it should mandate that the Employer
not diminish the size of the pay pool. This would ensure the availability of
funds to reward employee performance. Otherwise, employees could find themselves
in the situation of a sister laboratory in Boulder, Colorado, which also
participates in the demonstration project where, in the face of a budget
shortfall, employees had to sacrifice their pay increases.

2. The Employer’s Position

The Employer proposes that bargaining-unit
employees remain under the demonstration project "permanently for such time
as NOAA and DOC have authority to participate in the Project." To address
concerns raised by the Union during negotiations and improve labor-management
relations, it also proposes that: (1) a facilitated retreat be held during which
the Union and management would work in teams to better understand different
performance scores and requirements for promotions; (2) "teamwork"
wording be built into employee performance plans, as appropriate, with Union
input to be solicited in its development; (3) a Union representative be invited
to participate in annual meetings held for rating officials to ensure a more
common understanding of the rating guidelines and their meaning; (4) after
employee annual performance scores are determined, the Employer continue to hold
meetings for all employees and present statistics describing the distribution of
scores and pay increases; (5) a Union representative be invited to attend local
budget development meetings, on a case-by-case basis; (6) the 4-person ZT Pay
Pool remain within AOML, and no longer "float up" to a higher level
within the organization;(3) and (7) the parties continue to work together on morale
issues.

Employees
should continue to participate in the demonstration project because both the
Employer and employees benefit from the pay-for-performance system. The
demonstration project has enabled the Employer to link pay with performance and
improve the strategic management of its financial resources and human capital.
Moreover, it provides greater flexibility to manage the budget, and hire and
promote, with pay increases commensurate with an employee’s experience and
accomplishments. Annual evaluation reports verify that allowing managers
increased personnel management flexibility benefits employees, as evidenced by
higher average pay increases and bonuses than those employees would have
received under the GS system. Furthermore, the demonstration project is designed
to facilitate the Employer’s mission by providing management with tools to
improve recruitment, recognition and retention of high performers. In this
regard, there has been an increase in productivity as well as greater
communication between rating officials and their employees under the
demonstration project.

As to the Union’s
claim that OPM supports releasing bargaining-unit employees from demonstration
projects if their exclusive representatives object to further participation,
this matter subsequently was clarified by OPM.(4) Continued employee participation
in the demonstration project is needed to further assess whether alternative
personnel practices are more effective than traditional practices. OPM recently
authorized DOC to extend the demonstration project for a second 5-year term,
which shows that OPM believes that its continuation would be worthwhile.
Moreover, there is no evidence to suggest that the Employer has ever treated
employees disparately or exercised favoritism in utilizing its authority under
the demonstration project to reward achievement. No agency grievances have been
filed by employees since the inception of the project in 1998 alleging
management bias in rewarding employee performance. The other proposals put forth
by the Employer are intended to improve labor relations between the parties and
help employees gain a better understanding of personnel practices under the
demonstration project. In this regard, a retreat which brings together
management, employees and Union representatives might help to dispel
misconceptions regarding the demonstration project and foster an environment
where the parties have an open dialogue to address concerns. Including a Union
representative at the annual meeting of rating officials would give the parties
the opportunity to develop a common understanding of rating guidelines.

CONCLUSIONS

Having
carefully considered the parties’ proposals and positions on the issues, we
conclude that the impasse should be resolved on the basis of a modified version
of the Employer’s final offer. We are persuaded that the personnel
demonstration project has, at least initially, achieved certain objectives
"to link pay and performance, to retain high performers, and to expedite
and delegate human resources processes."(5) In our view, employees should
continue under the demonstration project so management can better determine the
effectiveness of a more flexible personnel management system. Continued employee
participation also is consistent with OPM’s decision to extend the
demonstration project for another 5 years to "validate the results of the
project." As to the Union’s position, there is little evidence in the
record to suggest that the Employer has been unfair when distributing funds
rewarding performance.(6) Moreover, requiring the Employer to guarantee a pay pool
equivalent to compensation levels that otherwise would have been in effect under
the GS pay system would undermine the flexibility the Employer seeks in
determining how performance should be compensated, and could impede its ongoing
effort to validate the results of the project. We also find the decision of a
previous Panel in Fort Detrick to be inapposite. The primary basis for
the Panel’s decision to release employees from the demonstration project was a
requirement in the Federal Register notice specific to that project stating that
bargaining units that did not want to participate should be excluded; there is
no similar provision in the Federal Register notice for the Employer’s
demonstration project. In addition, the employer’s proposal in Fort Detrick
was to permit unit employees to vote on whether they wanted to continue to
participate in the demonstration project, which is not the case here.

The Employer’s
proposals for, among other things, a facilitated retreat for managers, employees
and Union representatives, should lead to a mutual understanding of pay
practices under the demonstration project, and help alleviate skepticism about
how performance is rewarded. We find it necessary, however, to eliminate the
portion of the Employer’s proposal requiring bargaining-unit employees to
remain under the demonstration project "permanently for such time as NOAA
and DOC have authority to participate in the Project." Under 5 U.S.C. §
7119(c)(5)(C), final actions of the Panel "shall be binding on [] parties
during the term of the agreement, unless the parties agree otherwise," so
imposition of the Employer’s wording would be inconsistent with the authority
vested in the Panel by the Statute. Thus, our modification of the Employer’s
final offer ensures that the Union may revisit the issue of the continued
participation of bargaining-unit employees in the demonstration project when the
parties’ CBA expires.

ORDER

Pursuant to the
authority vested in it by the Federal Service Labor-Management Relations
Statute, 5 U.S.C. § 7119, and because of the failure of the parties to resolve
their dispute during the course of the proceedings instituted under the Panel’s
regulations, 5 C.F.R. § 2471.6(a)(2), the Federal Service Impasses Panel under
5 C.F.R. § 2471.11(a) of its regulations hereby orders the following:

The parties
shall adopt the Employer’s final offer, modified so as to require
bargaining-unit employees to continue to participate in the demonstration
project while the parties’ collective-bargaining agreement remains in effect.

By direction of the Panel.

H. Joseph Schimansky
Executive Director

May 5, 2003
Washington, D.C.

1.
The Union’s claim that OPM has expressed a view that the Panel should allow
employees to opt out of the demonstration project if such a proposal is made
during collective bargaining appears to stem from an e-mail communication from OPM’s
Compensation Group which, in response to a request from a DOC representative for OPM
guidance on dealing with Union proposals that would end bargaining-unit employee participation
in the ongoing personnel demonstration project, states:

We recommend that an agency try to work out the issues
internally, during the negotiations over the initial collective-bargaining agreement.
If the issues cannot be resolved internally, the bargaining unit should be allowed to
leave the demonstration project.

3.
Essentially, this means that a small group of employees in a particular pay pool would receive
pay increases from the budget for the laboratory; previously, those four employees had to
compete for pay increases along with a larger number of employees who were part of the
Employer’s headquarters group.

4.
In this regard, Nancy E. Rands, Acting Associate Director for OPM’s Office of Merit Systems
Oversight and Effectiveness later explained in a communication to DOC, dated August 2, 2002,
that OPM’s previous informal opinion was “advisory, not binding, in nature.” The communication
goes on to state that:

Issues such as employee participation in an ongoing demonstration
project should be treated no differently than other subjects regarding conditions of employment.
If the negotiations reach impasse, the services of the Federal Mediation and Conciliation Service
and the Federal Service Impasses Panel are available to both parties to assist in resolving the matter.